Brand risk management is the marketing investment that investors and finance will applaud and demand.
Brand marketers and advertisers are alienating significantly large consumer groups, and suffering for it. Advertising messaging, product packaging, branded events and many other formerly benign marketing efforts are now devolving into risk events which damage corporate reputations, drive stock prices lower and hurt overall enterprise market values. This is new. And it’s being caused by customary marketing actions which affect consumers who are no longer behaving in customary ways.
What’s changed? Our media landscape is now bifurcated. Our news and information delivery platforms are increasingly politicized, resulting in growing polarization along “red and blue” divides. Consumer messaging, advertising, social outreach, etc. intended for formerly “mass” audiences now disenfranchises consumers, instead of nurturing them into becoming loyal customers. And worse, companies endure aggressive brand boycotts, which not only hurt top-line sales, but also damage corporate identities. High profile examples abound: Kellogg’s, USAA, Dove, are recent headliners.
Ideologically-driven consumers are exercising their ultimate authority by folding their wallets for brands which stake out positions on socio-economic issues they don’t agree with. Those consumers can grow into an adversarial battalion and then an army -- within moments -- through the use of always-available and always-on social media.
Recent research from Ipsos shows the relationship between stock market price declines and consumers who have stopped buying for political reasons. Driven by ideology, consumers taking action do more than just hurt the companies they disagree with, they also hurt those companies’ stockholders. How long will investors tolerate this?
Today, managing “brand risks” is an imperative. In this slow-growth world, companies can no longer manage their marketing process and delivery according to decades-old rules which served a hi-growth, mass consumer, analog economy. Today, brand and marketing managers need to fashion and implement risk management approaches developed for the marketing/advertising function which can help mitigate marketing-induced risk to company valuations.
Marketing and advertising professionals have long pointed to the tremendous value brand assets deliver for corporate owners by highlighting the rapid growth of balance sheet-listed intangible assets over the past 30 years. Yet, there’s been little in the way of assessing and measuring marketing risk versus its long-acknowledged reward.
As we all know, aggrieved investors have numerous legal tools at their disposal to address perceived management missteps and omissions which hurt their equity or debt investments; class action lawsuits are common occurrences these days. It’s time for the marketing department to adopt brand risk management practices which help mitigate the real and growing socio-economic risks faced by companies in today’s ideologically-driven environment.